Ethereum and XRP ETFs Face Delays as SEC Extends Review

Once more, the U.S. SEC has put off its verdicts on several important crypto-related ETFs, including the Ethereum staking one and Grayscale’s XRP offering.

These delays come amid growing anticipation in the crypto community, with many expecting a more prompt resolution. The SEC, however, is proceeding carefully, balancing innovation with the need to protect investors in an increasingly complex environment.

SEC Extended Review on Ethereum and XRP ETFs

On May 20, the SEC announced a 45-day extension on Bitwise’s application to add staking features to its Ether ETF. This came just days before the May 22 deadline for a final decision, signaling the regulator’s need for more time to “consider the proposed rule change and the issues raised therein.” Alongside this, Grayscale’s XRP tracking ETF and Bitwise’s Solana ETF also faced delays, with the SEC opening proceedings for public comments and deeper scrutiny.

James Seyffart, a Bloomberg ETF analyst, explained that these extensions are hardly surprising. “The SEC typically takes the full allotted time to respond to 19b-4 filings,” he noted, referring to the regulatory process governing ETF approvals. Seyffart added that while some hoped for faster decisions, especially on XRP ETFs, an early green light would be “out of the norm,” even under a crypto-friendlier SEC.

This extension isn’t just a stall. It reflects the SEC’s careful approach to altcoin ETFs, which often involve more nuanced risk considerations compared to Bitcoin or Ethereum ETFs already on the market. The agency appears intent on ensuring these products meet all regulatory standards before approval, preventing hasty decisions that could lead to market instability.

More Crypto ETFs Waiting for Approval

In recent months, the lineup of crypto ETFs awaiting approval has expanded. Along with Ethereum and XRP, the SEC is expected to rule on Grayscale’s Polkadot ETF by June 11 and 21Shares’ Polkadot ETF by June 24. Bitwise and 21Shares have Solana ETFs in the pipeline as well, adding to the busy agenda.

This increase in filings comes after the departure of former SEC Chair Gary Gensler, whose tenure was characterized by strict crypto regulations and over 100 enforcement actions. Since Gensler stepped down in January, the SEC under Chairman Paul Atkins is seen as more receptive to crypto innovation while remaining careful and methodical in its evaluations.

Though the regulatory environment has become somewhat more flexible, the high number of applications is expected to slow down the approval process. Balancing investor protection with market growth is a difficult responsibility for the SEC, frequently leading to delays.

Market Reaction To Delays

From a market perspective, these delays have been largely shrugged off rather than sparking panic or exuberance. Confidence in crypto ETFs has improved notably since Atkins took the helm, thanks to his forward-looking approach. Still, industry watchers acknowledge that altcoin ETFs — like those tracking XRP, Solana, and Polkadot — demand extra caution due to their relative novelty and varying liquidity profiles.

James Seyffart suggests that if any early approvals are coming, they might appear by late June or early July, though a more realistic window is early Q4. Litecoin ETFs, in particular, are seen as strong candidates for earlier green lights, possibly setting the stage for broader altcoin ETF acceptance later in the year.

Ultimately, the SEC’s careful pace signals a maturing market. These ETFs, once approved, could pave the way for wider institutional crypto exposure, but only after the watchdog is satisfied that the rules are properly followed.

Key Takeaways for Investors

In general, these delays might try the patience of crypto investors waiting for new institutional products, but they reflect the nature of a regulatory system still learning how to handle digital assets. The surge in ETF applications shows both the growing enthusiasm for crypto and the hurdles regulators face.

As the SEC works through these decisions, paying close attention to announcements and public comment periods will be important. Changes in their approach or pace could signal shifts in the outlook for crypto ETFs.

Right now, it’s a matter of waiting and focusing on preparation rather than refusal. The path to more crypto ETFs may take longer than expected, but progress is happening toward safer and better rules.